Housing trends in fall 2012 include buyers working harder

Home buyers and refinancers seeking the best deal possible, you are running out of time.

While it's too early to consider calling this a seller's market, buyers will have to work a little harder to find the home of their dreams at a bargain this fall. That's especially true for those who want a newly built home.

You may get a good deal on a short sale as long as you are willing to wait. After new rules go into effect this fall, the short-selling process might be less painful than it is now.

If you are not interested in buying, selling or refinancing your home, that might be because you are too busy with home improvement projects. If that's the case, know you are not alone.

Potential home buyers entering the housing market this fall will face a harsh and somewhat confusing reality: It looks like a buyer's market, but it's not.

The inventory of for-sale homes, including foreclosed properties, continues to shrink in many parts of the country. As a result, it will probably take longer for buyers to find their ideal home. And they may not necessarily find the bargains they expect.

"Yes, there are good deals today, especially in the distressed-property market," said Shaun White, a vice president for the RE/MAX real estate network. "But because the inventory is so greatly reduced, it is more difficult to get your offer accepted. There are bidding wars going on in many parts of the country."

The average inventory of homes for sale nationwide was about 4.6 months in August, according to the U.S. Census Bureau.

But the market hasn't really turned into a seller's market yet. Many underwater homeowners have taken their homes off the market, contributing to the low inventory levels. And there are millions of foreclosures in the pipeline that eventually will hit the for-sale market.

"There are still a lot of foreclosure properties that we have to work through," White said. "We won't have a sustainable recovery until that happens."

Mortgage rates are being pulled in different directions. Borrowers who want to grab a low rate should act before the tug of war is over.

The Federal Reserve has been doing whatever it can to hold rates down, including printing billions of dollars per month to buy mortgage bonds. But higher mortgage fees, imposed by the Federal Housing Finance Agency, will push rates up this fall.

Starting Nov. 1, Fannie Mae and Freddie Mac will raise the guarantee fees they charge loan originators. On average, the increase translates into about a quarter of 1 percentage point in interest.

It's almost like the higher fees will be canceled out by the Fed's open-ended buying program, or QE3, said Brett Sinnott, director of secondary marketing at CMG Mortgage Group in San Ramon, Calif.

Rates likely will stay near the lows until the election, he said. What happens next is anyone's guess.

"What if after the election, they say, 'We're stopping (the bond-buying program) tomorrow,'" Sinnott said.

It's time to revisit that list of home improvement projects you keep putting off. As home prices stabilize, more homeowners will tackle remodeling projects this fall.

"Some prices have gone up, but I don't think that's going to be a holdback on remodeling," he said.

Fall is a great time to get materials at a discount as home improvement stores unload their summer inventory.

As you decide which projects to tackle first, it's wise to check your windows and consider adding insulation before winter arrives.

Kitchen and bathroom remodeling remain at the top of many homeowners' wish lists, according to the NAHB. "The most popular large project has been bathrooms," Melman said. "It's also less expensive than doing a kitchen."

A series of new short-sale guidelines that go into effect Nov. 1 are supposed to make the process of short selling easier and speedier.

Fannie Mae and Freddie Mac will allow servicers to streamline the short-sale process for borrowers who are in financial hardship and homeowners who have to sell their homes because of a divorce, disability or job transfer.

Short-sale specialist Patty Da Silva said she hopes servicers will embrace the rules, but she is skeptical.

On average, it still takes at least six months to sell a house through short sale, said Da Silva, owner of Green Realty Properties in Davie, Fla.

Under Fannie and Freddie's new guidelines, servicers must respond to a short-sale request within 30 days and give the borrower a final decision within 60 days.

If you are on the market to buy a newly built home, expect to find fewer choices and scarcer discounts.

The inventory of new houses for sale is at a record low. As of July, there were about 142,000 newly constructed homes for sale in the United States, according to the U.S. Census Bureau.

Because of the low inventory, builders face less competition. For buyers, that means fewer incentives and discounts.

That doesn't mean you should pay what the builder wants. There is always room for negotiation.

"I think the builders are going to continue to offer some incentives, but not to the extent they did in the depth of the crisis," Melman said.